Premier Doug Ford’s indication Tuesday that brewers who agree to sell buck-a-beer will receive prominent placement in LCBO stores could cost the provincial crown corporation tens or hundreds of thousands of dollars in lost revenue.
Speaking in Picton, Ont., the premier said that any brewer that agrees to brew beer that would sell in the LCBO for a dollar per can or bottle may get special shelf space, as what the PCs called a “non-financial incentive.”
“Nobody’s being forced to do this. It’s a buck-a-beer challenge – they’ll have end of aisle when it comes to the LCBO, they might have those shelf extenders, they might be able to go into the LCBO, but it’s costing the taxpayers zero,” Ford told reporters Tuesday.
But according to the latest rate card available from the LCBO, promotional placement like shelf extenders or end of aisle display usually requires alcohol producers to pay the LCBO a fee.
For example, a brewer seeking one shelf extender filled with its product in every LCBO where one is available specifically for Ontario beer — 361 of the LCBO’s 660 stores — would pay more than $27,000 for the promotion to run for roughly one month.
A brewer seeking an end of aisle display would pay between $170 to $215 per display, per store. The LCBO says up to 214 of its 660 outlets could host an identical end of aisle display for roughly one month or one “promotional turn” as they call it, at a cost of $36,000 to $46,000.
A half-page ad in the LCBO’s Food and Drink magazine, running three times per year, costs $42,400.
A partial or year-round promotional arrangement for even one brewer selling buck-a-beer in the province could easily represent more than $100,000 in lost revenue to the LCBO.
Finance Minister Vic Fedeli stressed that the amount of tax brewers pay on each unit of beer sold will remain unchanged.
“There are no financial incentives – the tax portion of the beer is not being reduced. The premier is asking beer producers to lower their prices down to a dollar.”
Ford has said buck-a-beer will be available in the province by Aug. 27, in time for Labour Day weekend.
The first brewer to announce its participation in the program is Barley Days Brewery in Picton, Ont.
NDP Leader Andrea Horwath said at Queen’s Park on Tuesday there is no doubt Ford’s plan will cost the LCBO money.
“These product placements or ads in the Food and Drink magazine that the LCBO has, these things have monetary value,” she said. “Here we have a premier who is cutting income to the very poorest amongst us as a priority, and at the same time subsidizing buck-a-beer,” referring to the recent cancellation of the basic income pilot program.
Green Party Leader Mike Schreiner also criticized the plan, calling it a distraction.
“After spending weeks ripping up contracts and curriculums, dismantling climate plans and pilot projects, this is the first time the premier has actually given us something,” Schreiner said in a statement. “But instead of a climate plan or help for people living in poverty, it’s a cheap beer challenge.”
The plan for buck-a-beer is being met with skepticism from some Toronto brewers who say they have other challenges to worry about.
“There’s tariffs that were just imposed on us for the aluminum,” Tory Burtch from Great Lakes Brewing said. “So that’s severely impacted how we will grow.”
He also criticized the PC’s decision not to reduce the amount of tax charged on each beer, saying that in order to have a beer in the LCBO that sells for $1, he would have to find a way to lower the cost of production per beer to about 13 cents, with the rest of the dollar taken up by taxes and retail markup.
